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Lloyd Projects Private Limited Vs. State of Punjab and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtPunjab and Haryana High Court
Decided On
Case NumberCivil Writ Petition No. 2546 of 1996
Judge
Reported in(1996)114PLR407
ActsConstitution of India - Article 226; Punjab State Electricity Board Purchase Regulations, 1981 - Regulation 13
AppellantLloyd Projects Private Limited
RespondentState of Punjab and ors.
Appellant Advocate R.K. Chhibar, Sr. Adv. and; Anand Chhibar, Adv.
Respondent Advocate P.S. Patwalia and; D.S. Nalwa, Advs.,; M.L. Sarin,
Cases ReferredIn Delhi Science Forum and Others v. Union of India and
Excerpt:
.....has tried to justify its action in awarding the contract to respondent 3. 4. having heard counsel for the parties and after perusing the original record produced by the board at the time of hearing, we are satisfied that the decision of the board has been taken bona fide in public interest and does not call for any interference by this court in the exercise of its extra ordinary jurisdiction. the contract being commercial, the board in the very nature of things was the only proper authority to pick up the best of the two bidders and having done this, after taking into consideration the totally of facts and circumstances, we are not inclined to interfere in the matter. while granting licenses a statutory authority or the body so constituted, should have latitude to select the best..........earnest money and competed for the contract. the tenders were opened on 19.7.1995. the lump sum price quoted by the petitioner for the work was rs. 304.90 lacs whereas that of respondent 3 was rs. 337.05 lacs. in reply to the query made in the tender form as to whether the prices quoted were subject to escalation, the petitioner answered that they were subject to escalation with maximum ceiling limit @ 9% per annum and the base price/index shall be of july, 1995. respondent 3, on the other hand, stated in reply to this query that the prices quoted by it were firm till completion of the works. the petitioner also stated that over run charges shall be applicable after six months @ rs. 15,000/- per week. respondent 3 did not mention any over run charges in its tender. the competent.....
Judgment:

N.K. Sodhi, J.

1. What is challenged in this petition filed under Article 226 of the Constitution is the action of the Punjab State Electricity Board (for short the Board) in issuing the letter of instant in favour of Lloyd Insulations India Ltd. (respondent 3) and the consequent award of the contract to it for the work specified in the notice inviting tenders.

2. By a notice published in the daily 'Hindustan Times' on 10.5.1995 the Board invited sealed tenders in sextuplicate for the design, manufacture, delivery to site, application, finishing, encasing and delivery of Thermal Insulation for 2 x 210MW-GNDTP Stage-III, (Punjab) Boiler and its auxilliaries. Last date for the receipt of tenders was 8.6.1995 till 2.30 P.M. and they were to be opened at 3 P.M. on the same day. Some pre-qualification conditions were also prescribed making it clear that tender documents would be issued only to those bidders who produce certificate for having done similar job for one number 210 MW Unit to the satisfaction of the client. It was also provided that the annual turnover of the bidder for the last three years should be at least Rs. 5 crores. A corrigendum was thereafter issued on 13.6.1995 and the date of submission of the tenders was extended upto 19.7.1995 and the pre-qualification conditions were also relaxed for the bidders/tenderers. According to the modified pre-qualification conditions tender documents were to be issued to those bidders who had carried out thermal insulation work valuing more than Rs. 1 crore for one project and produce certificate of successful commissioning and performance from actual user. The annual turnover of the bidder for the last year should not have been less than Rs. 5 crores. The petitioner and respondent 3 were the only two bidders who submitted their tenders along with the earnest money and competed for the contract. The tenders were opened on 19.7.1995. The lump sum price quoted by the petitioner for the work was Rs. 304.90 lacs whereas that of respondent 3 was Rs. 337.05 lacs. In reply to the query made in the tender form as to whether the prices quoted were subject to escalation, the petitioner answered that they were subject to escalation with maximum ceiling limit @ 9% per annum and the base price/index shall be of July, 1995. Respondent 3, on the other hand, stated in reply to this query that the prices quoted by it were firm till completion of the works. The petitioner also stated that over run charges shall be applicable after six months @ Rs. 15,000/- per week. Respondent 3 did not mention any over run charges in its tender. The competent authority evaluated the petitioner's bid vis-a-vis that of respondent 3 and after equalising the terms and conditions of both the tenders, the Board found that the rate tendered by respondent 3 was the lowest and, therefore a letter of intent was issued to it on 30.1.1996. It is this action of the Board that has been impugned before us in this petition, primarily on the ground that the rate tendered by the petitioner was lower and that the contract should have been awarded to it. The petitioner in para 7 of the petition has compared the terms and conditions of its tender with that of respondent 3 and since the lump sum price of the contract as quoted by the petitioner is less than the one quoted by respondent 3, it is contended before us that the Board has awarded the contract to respondent 3 for extraneous considerations thereby causing loss to the public funds. Another fact that needs to be noticed at this stage is that soon after the tenders were opened, the petitioner on its own addressed a letter to the Chief Engineer of the Board on 24.7.1995 trying to explain the price escalation limit of 9% per annum as quoted by it in its tender. The petitioner while describing it as clarificatory stated that escalation, @ 9% per annum means that during any year of execution of works the amount of escalation will not exceed 9% of the value of the work done. If the actual escalation as per its offer falls short of 9% in any year, the cushion available will not be carried over next year. The petitioner then gave illustrations as to how 9% escalation clause would actually be worked out during the period of the execution of the works. The Board considered this letter from the petitioner as a post tender effort on its part to improve its merit position by diluting the price escalation clause which it had initially quoted. According to the Board, the petitioner sought to modify/alter the terms and conditions of its tender initially quoted by it. It is not in dispute before us that the tenders submitted by the bidders were governed by the provisions of Punjab State Electricity Board Purchase Regulations, 1981 framed under Section 79(g) of the Electricity (Supply) Act, 1948 and that according to Regulation 13 read withClause 65.4 of the General Terms and Conditions to be observed by thetenderers, no post tender development was permissible regarding any change in prices and technical specifications. In fact, a tenderer trying to modify his bid after the same had been opened without any reference from the Board was liable to be black listed in terms of the aforesaid regulations. The Board did not take into consideration the subsequent alteration or clarification as the petitioner puts it and decided to award the contract to respondent 3.

3. In the written statement filed on behalf of the Board, a number of preliminary objections have been taken it being pleaded that no writ petition is not maintainable for quashing the grant of a non-statutory contract to respondent 3. It is further pleaded that the petitioner tried to modify the terms and conditions of its initial offer by addressing the letter dated 24.7.1995 (Annexure P9 with the writ petition) and even though it had disentitled itself from being considered in terms of the regulations, its claim was nevertheless considered by the competent authority and after equalising the terms and conditions of both the tenders received in response to the notice inviting tenders, the Board found that the tender submitted by respondent 3 was the lowest. It is also averred that after opening of thetenderers, the petitioner claimed that its tender was lower than the one submitted by respondent 3 and the evaluation made by the Board of the two tenders was disputed by the petitioner. It is submitted that since the petitioner sought to dispute the evaluation of the Board, the matter was referred to an independent agency namely Cost Controller who evaluated two tenders independently and came to the conclusion that tender of respondent 3 was actually lower even though lump sum prices quoted by it was higher. It is on the basis of the aforesaid assessment that the Board has tried to justify its action in awarding the contract to respondent 3.

4. Having heard counsel for the parties and after perusing the original record produced by the Board at the time of hearing, we are satisfied that the decision of the Board has been taken bona fide in public interest and does not call for any interference by this court in the exercise of its extra ordinary jurisdiction. As noticed earlier, the primary ground of attack on behalf of the petitioner is that its tender is lower and for this reliance is sought to be placed on the original tender wherein lumpsum price of the works has been quoted by the petitioner at Rs. 304.90 lacs whereas that of respondent 3 is Rs. 337.05 lacs. It is true that the lumpsum price quoted by the petitioner is less but that by itself does not indicate that its tender, after taking into account the other terms and conditions of the tender including the price escalation clause and the over run charges is lower that the one submitted by respondent no. 3. The competent authority consisting of experts in the field equalised the terms of both the tenders after considering their commercial loadness determined the latent price of each tender and came to the conclusion that the evaluated price of the tender submitted by respondent 3 was slightly lower that the one quoted by the petitioner. While determining the commercial loadness, thecompetent authority took into account the price escalation clause. The price quoted by the petitioner was subject to escalation @ 9% per annum whereas the one quoted by respondent 3 was firm till completion of the works. This clause seems to have tilted the balance in favour of respondent 3. Not only this, when the petitioner disputed the evaluation as determined by the Board, the matter was referred to an independent Cost Controller and he too opined that since the petitioner had quoted variable prices and mentioned maximum escalation ceiling of 9% per annum, its offer had been cost loaded by compounding this ceiling by considering that the work equivalent to1/3rd value of its quoted price would be done each year. As such, the offer of the petitioner had been correctly cost loaded @ 9% first year, 18.81% for second year and 28.62% for the third year by limiting annual impact on account of rise in prices to 9% per annum. The Cost Controller was further of the opinion that if the subsequent letter of the petitioner dated 24.7.1995 (Annexure P.9 with the writ petition) was to be considered, the cost loading on account of escalation would get reduced from Rs. 58,24,494/- to Rs. 27,44,100/-, changing the merit position. As already noticed earlier, the Board treated this letter as an alteration of the initial terms and conditions of the tender as quoted by the petitioner which, according to it, was not permissible under the purchase Regulations referred to above. The experts having examined the matter in detail and determined the latent price of each tender without any bias for or against either of thetenders, this Court has hardly any role to play in the matter and it cannot substitute its opinion for that of the experts particularly when it lacks the expertise in the field. In this view of the matter, the argument of Mr. Chhiber, Senior Advocate appearing for the petitioner that the figures mentioned by the Board in the comparative statement of the tenders (AnnexureR-1 with the written statement) on the basis of which the tenders were evaluated are wrong, cannot be accepted. We also find from the record that the Board in its meeting held on 22.1.1996 considered all relevant aspects regarding the grant of the contract in question and after comparing the merits of the two bidders, decided to award the contract to respondent 3. Factors which weighed with the Board and as recorded in its proceedings are as under :

1) 'Quantity of inputs of Lloyds Insulations will be significantly higher in comparison to those of Lloyds Projects.

2) Performance feed back to Lloyds Insulation as far superior to those of Lloyds Projects, rather those of the latter being not encouraging and;

3) Post tender clarifications were made by Lloyds Projects so as to affect its merit position.

In view of the above, it was decided to place an order on Lloyds Insulation at the counter rates of Lloyds Projects i.e. at all inclusive rates of Rs. 3.04,90000/- including ED and CST with price variation limiting to 9% during the contract period i.e. 2 years from the date of LOI and with the following terms and conditions :

a) No over-run charges will be paid during the grace period of six months after the contract period of 2 years. Thereafter the rate of these charges will be Rs. 15,000/- per week.

b) 10% interest bearing advance will be allowed against Bank guarantee valid upto warranty period.

c) Lloyds Insulation to accept Board's standard terms and conditions as per NIT.

d) Acceptance of Lloyds Insulation should be obtained before the LCI is issued.

e) Chief Engineer/Thermal Designs, is authorised to allow a variation upto () 5% of the contract price during execution of the contract.

The contract being commercial, the Board in the very nature of things was the only proper authority to pick up the best of the two bidders and having done this, after taking into consideration the totally of facts and circumstances, we are not inclined to interfere in the matter. The Board decided to place the order on respondent 3 at the rates quoted by the petitioner including escalation variation sought to be placed by it as per its letter dated 24.7.1995. Further more, in awarding the contract, the Board has imposed various conditions in respect of over run charges and advances etc. and also directed that before placement of the order on respondent 3, its acceptance of the terms and conditions including the rate escalation advances etc. be obtained. Admittedly, respondent 3 has accepted these conditions and it is only thereafter that the letter of intent was issued. Placement of the order is on comparative terms and in our opinion the interest of the Board has in no way been jeopardised. The petitioner has not been able to satisfy us that the ultimate decision of the Board in selecting respondent 3 was in any way vitiated. It has to borne in mind that this Court is not sitting in appeal over the decision of the Board. The argument of Mr. Chhibar that the petitioner was more experienced that respondent 3 and the former should have been awarded the contract cannot, therefore, be accepted.

5. Mr. Chhibar relied on the observations of the Supreme Court in Harminder Singh Arora v. Union of India, AIR 1986 SC 1527. The facts of that case are entirely different from those with which we are concerned in the instant case. The respondents therein had awarded the contract for the supply of milk to the General Manager Government Milk Scheme at a higher rate than the appellant therein, to the detriment of the State interest, but in the present case nothing has been done which is detrimental to the interest of the Board. Even if one were to assume that the rates quoted by the petitioner were lower than that of respondent 3, that by itself was not enough for it to be preferred over respondent 3. The Board had to take into consideration several other factors which it has and, therefore, this is not a fit case for us to interfere in the matter. In Delhi Science Forum and Others v. Union of India and another, JT 1996(2) SC 295, the learned Judges of the Apex Court in a similar situation in the matter of grant of licenses have observed as under :-

'......... .............. ................ .......... ......... ....... ........ ........ ........ ........ ........ ........

But at the same time all decisions which are to be taken by a authority vested with such power cannot be treated and examined by the Court.

-----------------------------------------------------------------------------------------....... .............. ................ .......... ......... ....... ........ ....... ........ ........ ........ .............

The question of awarding licensing and contracts does not depend merely on the competitive rates offered; several factors have to be taken into consideration by an expert body which is more familiar with the intricacies of that particular trade. While granting licenses a statutory authority or the body so constituted, should have latitude to select the best offers on terms and condition to be prescribed taking into account the economic and social interest of the nation. Unless any party aggrieved satisfies the Court that the ultimate decision in respect of the selection has been vitiated, normally courts should be reluctant to interfere with the same.'

6. It was then finally contended that the Board after opening the tenders held further negotiations with respondent 3 without affording such an opportunity to the petitioner. This fact is not borne out from the record and, therefore, this contention is also rejected.

7. In the result, the writ petition is dismissed leaving the parties to bear their own costs.


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